But Leung warned of challenges arising from residents’ changing consumption habits even though the government had launched initiatives to improve market sentiment, as he added that wages were also rising.

“However, a longer period of tight financial conditions may affect local economic confidence and activities,” he said, without specifying the conditions.

The city has been facing the double whammy of a downturn in the property and stock markets for months, which has hampered the “wealth effect” of residents.

Leung said exports of services continued to grow notably by 8.4 per cent year on year in real terms in the first quarter, with exports of travel services jumping higher thanks to the ongoing revival of visitor arrival numbers. Exports of goods increased by 6.8 per cent against last year.

On a quarter-on-quarter basis, the city’s gross domestic product (GDP) grew 2.3 per cent.

In 2023, the economy rebounded with a slower-than-expected 3.2 per cent growth, following a 3.5 per cent contraction in 2022 from 2021.

Associate Professor Billy Mak Sui-choi of Baptist University’s accountancy, economics and finance department said the full-year GDP growth forecast did not need to be changed given the latest first-quarter figure.

“Economic growth between 1 per cent and 3 per cent is very common in Hong Kong, like in many developed economies,” Mak said, adding he predicted an expansion of between 2.5 and 3 per cent.

He added that both mainland Chinese and international tourist numbers still had room to rise, adding that increased arrivals combined with improved aviation capacity would help sustain economic growth.

Gary Ng Cheuk-yan, a senior economist at Natixis Corporate and Investment Bank, also said the city was on track to reach the government’s full-year forecast, but noted weaker numbers in consumption and the property market in April showed the economy was still under pressure.

“At the moment, my GDP growth forecast for the year is about 2.8 per cent,” Ng said. “The key thing for the government to do now is to find a way to boost the performance of the finance industry, which affects many other industries such as law and accountancy.

“If issues in the finance industry can be solved, although they are probably just 20 per cent of all problems, it could help tackle the rest of the 80 per cent. This is what needs to be done if we want to see strong, game-changing effects in the short term.”

In the first three months, tourism arrivals jumped by 154.3 per cent compared with the same period last year to 11.22 million, led by growth in mainland visitors, whose arrival numbers surged by 159.1 per cent to 8.69 million. They accounted for 77.4 per cent of total arrivals.

The post-Covid pandemic recovery in tourism continued in April, with visitor numbers jumping by 100 per cent against a year ago to 14.62 million. Among them 76 per cent, or 11.17 million, were from the mainland.

Xia Baolong, the director of the Hong Kong and Macau Affairs Office, last week urged the Hong Kong government to overhaul its tourism offerings amid “profound changes” in the market and treat every corner of the city as a potential spot to lure visitors.

Beijing announced the following day it would allow solo travellers from eight more mainland cities to visit Hong Kong.

From May 27, residents of Taiyuan, Hohhot, Harbin, Lhasa, Lanzhou, Xining, Yinchuan and Urumqi will be able to apply to visit Hong Kong on a solo basis instead of needing to join a group tour.